SEOUL — Corporate direct financing in South Korea experienced a significant reduction in March, primarily driven by a steep decline in corporate bond issuances. This financial shift indicates a challenging environment for corporate fundraising in the region.
According to Yonhap News Agency, local firms amassed a total of 20.5 trillion won (approximately US$14.86 billion) through the sale of stocks and bonds last month, marking a 22.5 percent decrease from February. Direct financing, which involves acquiring funds directly from stock and bond markets without intermediation from banks or other financial institutions, saw varied trends in its components.
While stock issuances saw a dramatic increase, rising over sevenfold to 1.9 trillion won from 242.8 billion won in the previous period, bond sales witnessed a 29 percent monthly decline, falling to 18.62 trillion won from 26.23 trillion won. Despite the overall downturn, the value of outstanding corporate bonds was up slightly by the end of March, totaling 655.86 trillion won, an increase of 2.19 trillion won from the end of February.
In related financial instruments, the issuance of commercial papers also declined, totaling 27.3 trillion won in March, a decrease of 7.23 trillion won or 20.9 percent from the previous month. Conversely, the issuance of short-term bonds in March amounted to 63.2 trillion won, showing a modest rise of 790 billion won or 1.3 percent from February.
These figures underscore the volatile nature of corporate financing amidst varying economic pressures in the South Korean market.